Recently, I’ve noticed many people asking me how to read candlestick charts. In fact, this is the most basic yet most crucial skill in technical analysis. Instead of memorizing patterns blindly, it’s better to first understand the logic behind candlesticks.

Candlesticks are essentially a candle that condenses four prices over a period of time—opening price, closing price, highest price, and lowest price. The rectangular part is the candlestick body, and the thin lines above and below are called shadows or wicks. Simply put, if the closing price is higher than the opening price, it’s a bullish candle; otherwise, it’s a bearish candle. The shadow above the body represents the highest price, and the shadow below shows the lowest price.

Different timeframes will display different candlesticks. Daily candles reflect short-term fluctuations within the day or a few days, suitable for short-term trading. But if you are a long-term investor, looking at daily candles alone isn’t enough. You need to look at weekly or monthly candles to see the full picture of the battle between bulls and bears over the entire month.

Regarding how to read candlesticks, my experience is to not worry about those complicated pattern names first. There are three most practical methods: First, observe where the closing price lands within the body, which tells you who currently controls the market. Second, compare the length of the current candlestick body with previous ones; larger bodies indicate stronger buying or selling forces. Third, identify what the highs and lows are doing—if both are rising, it’s an uptrend; if both are falling, it’s a downtrend; if they are roughly the same, the market is consolidating.

Predicting reversals is the most difficult but also the most profitable part. The process is as follows: first, wait for the price to reach key levels like support or resistance and observe if there are signs of a breakout. Then, check if the candlestick bodies are getting smaller and if the trend is weakening, which can be confirmed with volume and technical indicators. Finally, wait until the retracement momentum strengthens before executing a trading strategy.

One detail to watch out for—false breakouts can be deadly. Many traders see a large candlestick breaking above a high and rush in, only to see the price reverse immediately and incur losses. The way to deal with false breakouts is to first identify where the support and resistance lines are, and after the price pulls back and the breakout fails, take a position in the opposite direction.

Another key observation: when the swing lows gradually rise and approach resistance, it indicates that buyers are gradually pushing the price higher, and sellers lack enough strength to push it down. Usually, the price will continue to rise. This pattern often appears as an ascending triangle on the chart. Conversely, when momentum shows overbought or oversold conditions, the market often reverses because the buying or selling force has been exhausted.

Honestly, there’s no shortcut to reading candlesticks; it’s all about practice and observation. The core is understanding where the closing price is and the length of the body. Master these, and other patterns will naturally become clearer. Trend judgment at swing points is also very important, as it helps you grasp the overall market direction. Lastly, remember that when the trend slows down or the retracement strengthens, it indicates the opposing force is weakening, and you should be especially cautious.